Former drug company CEO Martin Shkreli was found guilty Friday on three counts of fraud. Veuer's Nick Cardona (@nickcardona93) has that story.
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Former pharmaceutical executive Martin Shkreli points as he exits the courthouse Friday after the jury issued guilty verdicts on three of the eight counts involving securities fraud.(Photo: Getty Images)

NEW YORK So-called "Pharmacy Bro" Martin Shkreli was convicted Friday on three of eight criminal charges that he scammed investors, a mixed verdict that left both prosecutors and defense lawyers hailing the outcome.

Capping more than 4½ days of deliberations, a Brooklyn federal court jury found the New York City health care industry entrepreneur guilty of two securities fraud charges and one count of conspiracy to commit securities fraud.

Unless overturned on an expected appeal, the verdict means Shkreli, 34, could face up to 20 years in prison, though defense attorney Benjamin Brafman predicted he would receive a far more lenient sentence from U.S. District Court Judge Kiyo Matsumoto if the convictions are upheld after a planned defense appeal.

The verdict appeared to credit prosecutors' allegations that Shkreli broke securities laws while also accepting defense contentions that there was little or no financial damage for the largely wealthy clients who trusted him with their investments.

Shkreli looked at Brafman and shook his head as the judge read the first of the guilty verdicts. His father, Pashko Shkreli, showed no visible emotion as he sat in the first row of the Brooklyn federal courtroom.

Shkreli remains free on bail pending sentencing, which the judge will set later.

Outside the courthouse, Shkreli called the trial "a witch hunt of epic proportions." But he claimed victory because the jurors found him not guilty on one of the most serious charges, looting a pharmaceutical company he founded and took public, and found limited financial harm to investors.

"Maybe they found one or two broomsticks," Shkreli said of the panel members, "But at the end of the day we've been acquitted of the most serious charges in this case."

After thanking his attorneys, the frequent social media provocateur almost immediately broadcast his view of the case on Twitter, tweeting, "I'll take it," in reference to the verdict. He added that his investors "tripled their money, on average."

After that witch hunt, I'll take it. MSMB investors tripled their money, on average, EXCLUDING any settlements.

Soon afterward, Shkreli began amplifying his response via a live YouTube video appearance where he answered questions from supporters and others.

The trial outcome underscored the long legal odds Shkreli faced in fighting the government, rather than seeking a plea-bargain deal. In all, 416 of the criminal cases disposed of in the Eastern District of New York during the federal government's 2015 fiscal year concluded with in convictions via trials or plea deals. Not one resulted in a not-guilty outcome, federal data show.

Shkreli still faces civil charges filed by the Securities and Exchange Commission and a separate lawsuit lodged against him by Retrophin, the pharmaceutical company from which he had been accused of stealing stock and money.

He has countersued Retrophin on allegations of wrongful firing, a case Brafman predicted Shkreli would now win.

Brafman also characterized the verdict as reasonable under the circumstances and joined his client in praising the jurors for rejecting the Retrophin charge and much of the government's case.

"For Martin to be found guilty on five of eight counts is a very, very good result as far as we are concerned," said Brafman. "It's a real testament to trial by jury and a testament to the importance of advocacy."

However, Acting U.S. Attorney Bridget Rhode declared, "justice has been served," as she twice focused on the three criminal charges that ended with convictions. Rohde added her thanks to the jurors for paying close attention to the evidence during the five-week trial as she also praised the "team effort" by the three assistant U.S. attorneys who prosecuted the case.

Shkreli, 34, is the son of Croatian and Albanian immigrants who grew up in Brooklyn and now lives in Manhattan.

The former CEO of Turing Pharmaceuticals shot to national notoriety in 2015 by ordering a 5000% price hike on Daraprim, a medication used to attack toxoplasmosis, a parasitic illness that typically afflicts those with the HIV virus or others with weakened immune systems.

That decision made Shkreli a target of patients, healthcare professionals, and some of the 2016 U.S. presidential candidates.

Brafman said the episode, though excluded from the trial, made the defense team's job more difficult "primarily because of the anti-Shkreli sentiment" that shadowed his client constantly, both in person and online.

Separately, Shkreli attracted both criticism and plaudits for spending what Bloomberg News reported as $2 million to purchase Once Upon a Time in Shaolin, a one-of-a-kind recording by the Wu-Tang Clan, the famed Staten Island, N.Y. rap band.

However, Shkreli, who characterized congressional officials as "imbeciles" after he refused to testify at a House hearing on drug pricing, was charged and tried for something far more run-of-the-mill — white-collar crime allegations of the kind regularly alleged in hundreds of thousands of financial cases.

The eight-count indictment against Shkreli charged that he ran a Ponzi-like scheme that ripped off investors in MSMB Capital and MSMB Healthcare, hedge funds he once ran. Additionally, he was accused of improperly repaying the burned investors with unauthorized stock grants and payments from Retrophin.

The indictment further accused Shkreli of conspiring to control and manipulate the price of Retrophin's stock.

Evan Greebel, a former outside counsel for Retrophin who was indicted with Shkreli, is scheduled to be tried separately this fall after both defendants successfully pressed for separate trials.

The government and the defense teams pursued sharply different legal strategies during the trial.

Prosecutors presented a mini-parade of investors who testified that Shkreli lied to them or misled them about their funds and his companies' financial performance.

Records and other prosecution testimony also showed that Shkreli's companies lacked the independent auditors promised to investors and at times had little money, despite the rosy account statements sent to investors.

Records and testimony also showed Shkreli gave Retrophin stock to trusted employees and others who would help him keep the share price up.

Shkreli did not testify in his own defense, avoiding what likely would have been tough cross-examination by prosecutors.

Taking the witness stand also could have let the government team question Shkreli about his drug-pricing decisions, a subject that Brafman characterized as the dangerous "elephant in the room."

Roughly a dozen potential jurors were dismissed from serving on the case because they voiced criticism of his price hikes. Some alternately referred to Shkreli as a "snake," the "face of corporate greed" and the "most hated man in America."

The defense team also called no witnesses of their own. Instead, Brafman and other lawyers aggressively cross-examined government witnesses. They extracted grudging admissions that all of the relatively wealthy investors who testified ultimately got their money back — with large gains.

The defense coupled no-harm-no-foul legal arguments with the contention that Shkreli never set out to mislead or lie to investors and thus lacked the criminal intent required to justify a guilty verdict.

"If Martin Shkreli says what he believes is true, I submit that's an act of good faith," Brafman said during his closing argument to the jury, adding, "and you must acquit."

Under federal law, the relative income and net worth of an alleged fraud victim have no bearing, Assistant U.S. Attorney Jacquelyn Kasulis argued during the government's rebuttal arguments last Friday before the case went to the jury.

“There is no rich person exception to the law. That’s insulting,” she said.

Regarding the issue of Shkreli's intent, Kasulis told jurors "a belief that everything will work out “does not excuse fraud under the law.”

Throughout the trial, Shkreli maintained his presence on Facebook Live and YouTube, popular social media platforms where he vented his views and continued a regular Sunday-night recap of his stock-trading decisions.

"We've got the prosecutors pretty freaked out," he said during a July 2 Facebook Live session in which he offered investing advice while hosting the event in a V-neck T-shirt and shorts. "The case is falling apart before their eyes, and they don't know how it's happening. Sad."

In a what appeared to represent an oddly harassing echo of his drug price hike decision, Shkreli also posted a Facebook offer to sell Internet domains in the names of two female reporters who covered his trial.

"I bought these domains for $12 — you can have them for $12,000, he wrote, explaining he was raising money "for my debut album: ‘God’s Gift.'"

"Of course he’s jacking up the price," the New York Post, the employer of one of the reporters, said in a story about the episode.

In similar comments hours before the Friday verdict was delivered, Shkreli tweeted unwanted comments about the personal appearance of both the Post reporter and another female journalist who covered the trial.

While prosecutors characterized Shrekeli as calculated and cunning, the defense adopted one government witness' description of him as "Rain Man," the title character of the 1988 film in which actor Dustin Hofman portrayed an autistic savant.

Shkreli appeared to validate Brafman's pre-trial statement that his client frequently traveled "to the beat of his very unique drummer." He made a surprise June 30 visit to a courtroom where reporters and the public could view the proceedings on a closed-circuit video feed, and then labeled the federal prosecutors handling his case the "junior varsity."

Shkreli also insisted one government witness who testified he'd misled her had not been a "victim," and maintained he never considered seeking a plea deal with prosecutors, complained about news headlines about the trial and griped that people "blame me for everything."

"Do I want to exonerate myself?" Shkreli asked reporters during an unprompted conversation.

"Yes."

The appearance prompted a complaint by prosecutors, who argued that Shkreli's comments could have influenced any jurors who happened to be within earshot, potentially tainting the trial. Agreeing, Matsumoto issued an order that barred Shkreli from discussing the case in or near the courthouse for the trial's duration.